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CCL Market Update: Employment, Oil Prices, Loan Programs, Mortgage Rates

This past week brought us favorable reports regarding the job market. According to the Bureau of Labor Statistics, 252,000 jobs were added in December, which is significantly more than the 240,000 jobs that economists had predicted would be added.  October and November job gains were also revised higher by 50,000.  Over the last months of the year, monthly job gains averaged a robust 289,000.  In total, nearly three million jobs were added in 2014!

Additionally, the unemployment rate fell to 5.6%, the lowest rate since the recession. This is a considerable decrease from last month’s 5.8% unemployment rate, and is significantly closer to the Federal Reserve’s target range of 5.2-5.5% unemployment, a range consistent with full employment.

Despite such a decrease in the unemployment rate, wage growth hasn’t followed suit, and worker wages have actually declined. In December, hourly earnings declined by 0.2% to an average of $27.54 per hour. In November there was a 0.2% increase in average earnings, but as you can see, the trend did not continue.  Overall for 2014, average worker wages increased a mere 1.65%, just in line with inflation.

Regardless of the recent decline in wages, economists are predicting a more substantial wage growth in 2015. The low unemployment rates and the fact that 21 different states are raising their minimum wage this month may both point to the acceleration of wages in 2015.

Falling oil prices seem to be causing some concern among investors lately. People are afraid that the lower cost of gas is a sign that deflation may be coming. As a result, S&P 500 saw a drop of 0.7% last week, and 1.7% the previous week. However, according to a Bloomberg post, the markets are undecided on whether this is positive for consumers and the economy, or if it tells of upcoming financial strain.

This week will feature a report on Retail Sales figures.  We are anticipating news about the significant increase in retail sales and during the holidays, especially in comparison to last year’s Holiday retail sales numbers. So far, ShopperTrak, who compiles data from retail stores’ sale logs, has reported that holiday sales increased 4.6% compared to 2013. The low gas prices are likely one reason for this increase in consumer spending. Producer and Consumer Price reports are also due out later in the week.  Inflation seems to be running below the target numbers, which should continue to keep rates low.


Loan Program News

Interest rates continue to fall!  If you purchased or refinanced your property in the last 18 months it’s time for a mortgage check-up to see if you can save money or shorten your loan term.

President Obama announce this past week a significant reduction to the monthly mortgage insurance premium for FHA-insured mortgages.  This 0.5% decrease combined with the general decline in interest rates will present a great refinance opportunity for all FHA borrowers.

Fannie Mae is offering a new low-downpayment mortgage option for 2015. This new 3% down (97% loan-to-value) option is helpful for homebuyers who would potentially qualify for a loan but are unable to pay a 5% or higher downpayment. This program may also be helpful for homeowners whose homes have lost value, but still do not qualify for the Home Affordable Refinance Program (HARP).

Consider visiting our FAQ section to learn about our Homestyle Mortgage program which allows you to purchase or refinance while also financing desired home improvements.


Mortgage Rate News

Rates have fallen to levels not seen since May 2013. This week’s rates are keeping pretty consistent with last week’s rates. The 30-year fixed continues to be around 3.75% (3.77% APR) to 3.88% (3.89% APR), while the 30-year FHA ranges from 3.25% (5.34% APR) to 3.50% (5.56% APR).

These rates were determined with the following loan parameters: the 30-year fixed had a $522,000 purchase price and a $417,000 loan amount; the 30-year FHA had a $432,124 purchase price and a $417,000 loan amount.

If you are interested in visualizing the rate movement, take a look at Freddie Mac’s weekly survey on mortgage rate movement here.

With these low rates, now is a great time to give us a call and learn about how you can benefit from refinancing. Call us at 805.543.LOAN.

Written by Central Coast Lending - Go to Central Coast Lending's Website/Profile